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 The ruble was about 3 percent firmer against the dollar on the day
after the government sold dollars to try to prop it up and because
exporters sold dollars in preparation for monthly tax payments due
this week.
At 0735 ET, the ruble was up around 3 percent against the dollar at
65.45 rubles per dollar and was 4 percent stronger versus the euro
at 81.68.
The ruble had fallen by around 6 percent in the early minutes of
trading. Small volumes were capable of moving the market sharply in
either direction.
"Today it's likely exporters are helping the ruble, though we
haven't seen them or the central bank," said Pyotr Neimyshev at
Otkritie bank in Moscow.
The Finance Ministry said it had started selling foreign currency
left over on its accounts, but this provided only fleeting support
to the ruble.
The ruble has come under heavy selling pressure this week, falling
around 20 percent against the dollar at one stage on Tuesday,
despite the central bank increasing its key interest rate by an
unexpected 650 basis points, in an emergency move that did little to
buttress the currency.
The situation poses a major challenge for President Vladimir Putin
whose popularity, based partly on providing stability and
prosperity, is at risk from a ruble decline that is damaging
Russia's credibility among investors.
Putin holds his annual end-of-year news conference on Thursday, when
he will field questions from a studio audience as well as from
television viewers around Russia, and is expected to comment on the
ruble's decline.
His press secretary, Dmitry Peskov, was quoted by Kommersant
newspaper as saying the president did not plan to make any "special
declaration" and was not expected to comment in detail before the
news conference.
Putin failed in a state-of-the-nation address on Dec. 4 to offer any
"big ideas" to turn around the economy - which is sliding towards
recession after being hit by Western sanctions over the Ukraine
crisis and by a fall in the global price of oil, on which the
Russian economy is heavily dependent.
VOLATILE TRADING
The ruble opened sharply weaker before briefly surging after the
Finance Ministry announced the start of its forex sales. The
ministry later said it had only around $7 billion in leftover
foreign currency and that it had not decided yet how much it would
sell, curbing market optimism.
"If nothing structurally and geopolitically changes, if everything
remains as before, then the $7 billion won't have any effect,"
Neimyshev said.
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The ruble's slide has stirred memories of the 1998 Russian financial
crisis, when the currency collapsed within a matter of days.
"What we're seeing now is the result of choosing the wrong time to
float the ruble," analysts at Bank Zenit in Moscow said in a note,
following the central bank's decision last month to float the
currency.
Drawing comparisons with the global financial crisis of 2008/09,
they wrote: "In contrast to the situation in 2008-09, the market
isn't sure the central bank will come out to defend the ruble at a
firm price."
Investors are awaiting further concerted action from the central
bank and government to stabilize the currency market, which has in
recent days seen the largest intraday swings since 1998, also
prompting increased public demand for dollars.
Two traders said they did not believe the central bank was
intervening heavily in the market, and a currency dealer at a large
Russian bank said he believed exporters were having their arms
twisted to sell their foreign-currency earnings.
Russia's central bank has conducted over $80 billion in forex market
interventions this year to defend the ruble.
The bank on Wednesday said it had conducted $1.961 billion worth of
forex market interventions on Dec. 15, the latest date for which it
has provided data.
(Additional reporting by Darya Korsunskaya, Oksana Kobzeva, Katya
Golubkova and Polina Devitt; Editing by Elizabeth Piper and Timothy
Heritage, Ralph Boulton)
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